SABMiller Spurned by Heineken Family After Approach

SABMiller Plc was rebuffed in an attempt to buy smaller brewer Heineken NV, a deal that would have strengthened it against a potential bid by Anheuser-Busch InBev NV, people with knowledge of the matter said.

Heineken, the brewer of Amstel Light, confirmed in a statement that it turned down the offer and said it intends to remain independent. SABMiller’s preliminary approach was rejected by the family that controls Heineken, Bloomberg News reported yesterday, citing people who asked not to be identified because the information is private. The offer, made in the last two weeks, would have made the family one of the combined company’s largest holders, one of the people said.

Shares of Heineken rose as much as 4.3 percent to 61.98 euros in Amsterdam, the highest since December 1998. Heineken family members are resistant to any sale because they want to keep control of the 35 billion-euro ($45 billion) brewer, the people said. SABMiller, long the subject of speculation regarding a takeover by AB InBev, is assessing its next move, the person added, and it’s not clear if it will approach the family again. SAB shares gained 6.2 percent to 3,617 pence at 8:05 a.m. in London, the most in nearly two years.

“For SAB, a way of preserving their independence is to buy Heineken,” said Matthew Beesley, portfolio manager and head of global equities for London-based Henderson Global Investors Ltd. “It’s easy to underestimate the desire for management teams to be in control of their own destiny rather than to sell their business at a very high price.”

Brazil, Mexico

Heineken determined SABMiller’s proposal was “non-actionable,” the company said in its statement. “The Heineken family and Heineken N.V.’s management are confident that the company will continue to deliver growth and shareholder value.”

Richard Farnsworth, a spokesman for London-based SABMiller, declined to comment.

AB InBev, the Belgian giant, has spent close to $100 billion over the past decade to purchase brews from Corona to Budweiser. By acquiring Heineken, SABMiller would add more than $25 billion in sales and bolster its presence in emerging markets including Africa and Mexico, while helping keep control over its future.

Aside from adding regions, a deal would make sense for SABMiller in helping boost its portfolio of global beer brands, Jonathan Fyfe, an analyst at Mirabaud Securities, said in a note yesterday. Heineken has four brands in the global top 10 of premium beer, he wrote, citing company data.

Largest Deal

“We are not at all surprised that SABMiller mooted the combination,” said Trevor Stirling, an analyst at Sanford C. Bernstein & Co. in London. “However, we view this as an extremely complex combination, which would require substantial disposals and where the executional and cultural challenges of merging these two companies would be immense.”

An offer for the world’s third-biggest brewer could rival the largest purchase of a beermaker ever -- InBev NV’s acquisition of Anheuser-Busch in 2008. The industry has spent much of the last decade consolidating as brewers fought off sluggish consumer-spending growth and an increasing preference for wine and spirits over beer.

Heineken traces its roots to the 1864 acquisition of a brewery by Gerard Adriaan Heineken. The founding family control the brewer via another publicly traded vehicle, Heineken Holding NV. Shares of the Dutch brewer, which sells in more than 70 countries, had gained 21 percent this year before today.

SABMiller Expansion

Even with a series of acquisitions in emerging markets, Heineken’s largest region remains western Europe, where it has fought declining demand with new ranges including Amstel Radler and the tequila-infused Desperados.

Over the past 20 years, SABMiller has gone from being primarily a South African brewer –- where the company was founded as a purveyor of ale to thirsty gold miners in the 19th century –- to the world’s No. 2 via acquisitions from Colombia’s Bavaria to the 2011 purchase of Australia’s Foster’s.

SABMiller itself has long been seen as the final target for AB InBev in its quest to dominate beer sales across the globe.

SABMiller CEO Alan Clark told Bloomberg News in January that the case could be made for a tie-up between his company and AB InBev, even though it would probably require divesting some U.S. operations to appease regulators. Sanford C. Bernstein has estimated a combination of those two would have almost half of global beer profits.

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